Company Vehicles

Control Objectives for Company Vehicles

(a) To ensure that an authorised vehicle policy is established and adhered to;
(b) To ensure that vehicles are only allocated to and utilised by authorised,
and eligible staff for defined purposes;
(c) To ensure that vehicles of the appropriate type are acquired at the
optimum cost;
(d) To ensure that all vehicle acquisitions are authorised;
(e) To ensure that vehicles are operated legally and comply with all the
relevant regulations;
(f) To ensure that vehicles are adequately and economically maintained and
operated;
(g) To ensure that all vehicle expenditure is justified and authorised;
(h) To ensure that vehicles are disposed of at the optimum time and price;
(i) To ensure that vehicles are maintained in accordance with the warranty
conditions;
(j) To ensure that all accidents and damage are reported, claimed via the
insurers, and satisfactorily settled;
(k) To ensure that all fuel costs are valid, authorised and accounted for;
(l) To ensure that all vehicle costs are correctly identified, authorised, and
accounted for;
(m) To ensure that vehicles used to deliver and distribute goods are suitably
licensed and conform to the relevant regulations: and
(n) To ensure that suitably qualified and experienced staff are employed to
administer the vehicle fleet.

Risk and Control Issues for Company Vehicles

1 Key Issues

1.1 Has a suitable company vehicle policy been developed, authorised

and implemented?
1.2 How can management be assured that all company vehicle purchases
and allocations are authorised, in accordance with the policy, and correctly
treated in the accounts?
1.3 What processes ensure that all vehicles are operated legally and in
accordance with all the relevant regulations?
1.4 How can management be sure that all vehicle operating costs are
justified, correct, authorised, and accounted for in the accounts?
1.5 What mechanisms ensure that all vehicles are regularly and
adequately maintained in accordance with the warranty conditions?
1.6 How can management be sure that vehicles are disposed of at the
optimum time and price, and that all disposal proceeds are correctly
accounted for?
1.7 Are all accidents involving company vehicles correctly reported,
processed and settled through the insurers?
1.8 How does management exercise control over fuel costs, so that only
justified, appropriate and authorised fuel costs are accounted for?
2 Detailed Issues

2.1 Does the prevailing vehicle policy adequately define the authorised vehicle
types and applicable staff categories?
2.2 What mechanisms prevent the acquisition of an unauthorised vehicle type?
2.3 If vehicle price limits are established, what processes prevent purchases
exceeding the limit?
2.4 How can management be assured that vehicles are purchased at the best
negotiated prices?
2.5 Are vehicles only purchased from reputable dealers/agents, and what
mechanisms prevent dealings with unauthorised suppliers?
2.6 Are appropriate discounted terms arranged with manufacturers in the
event of quantity purchases?
2.7 How are all vehicle purchases authorised, and what prevents an invalid
transaction being processed?
2.8 Are all new vehicles subject to inspection and would faulty or damaged
vehicles be detected and rejected?
2.9 How can management be certain that all vehicle purchase costs are
accurately identified and correctly accounted for (i.e. in the fixed assets records)?
2.10 Has an authorised company vehicle depreciation policy been implemented,
and does it follow normal accounting practice or fiscal legislation?
2.11 Has an adequate vehicle fleet administration department been established,
with suitably qualified and experienced staff?
2.12 How can management be assured that all legal and regulatory matters are
correctly dealt with? (i.e. road fund licences, adequate insurance cover, vehicle
roadworthiness, legal emission levels, etc.).
2.13 Would failures to comply with legal and regulatory requirements be
promptly detected and rectified?
2.14 How can management be assured that all company vehicle drivers are
(and remain) correctly licensed and eligible? (i.e. including heavy goods vehicle
and specialist vehicle drivers).
2.15 What mechanisms ensure that goods vehicle drivers are operating in
accordance with the prevailing legislation (i.e. including permitted driving hours,
correct utilisation of tachographs, etc.)?
2.16 Are drivers made fully aware of their responsibilities for vehicles allocated
to them and made to sign for the vehicle in good condition upon allocation?
2.17 Are all company vehicles correctly and adequately insured, and are drivers
aware of their responsibilities in the event of an accident ?
2.18 Are company vehicles adequately protected against theft?
2.19 How can management be certain that vehicles are serviced and maintained
in accordance with the manufacturers recommendations and relevant warranty
conditions?
2.20 What mechanisms ensure that all valid warranty claims are identified,
processed and settled?
2.21 How can management be assured that all vehicle maintenance and repair
costs are justified and authorised?
2.22 What controls prevent non-company vehicle costs being accepted and
processed?
2.23 Are all company vehicles traceable to a named driver and location?
2.24 Does the vehicle administration system alert management to forthcoming
events and actions (i.e. renewal of taxation)?
2.25 Would management be able to promptly identify unusually high vehicle
servicing costs for an individual vehicle?
2.26 Is regular and accurate vehicle fleet management information provided,
and how is follow-up and action to reported anomalies evidenced?
2.27 Is the system capable of highlighting vehicles that are either approaching
their disposal date or have excessive associated costs?
2.28 Are all maintenance and repairs only conducted by suitably qualified and
authorised suppliers to the necessary standard (and how is the standard
confirmed)?
2.29 Have emergency and out of hours breakdown facilities been cost-
effectively provided, and are the relative costs monitored?
2.30 Has management established an authorised policy for vehicle fuel costs,
and what prevents unauthorised or invalid fuel costs being met by the company
(i.e. for private journeys)?
2.31 When applicable, are company fuel cards only issued to authorised
employees, and what mechanisms prevents their misuse?
2.32 Are fuel costs reported, adequately monitored and followed-up by
management?
2.33 What processes ensure that all accidents are correctly reported?
2.34 How can management be assured that all accident damage is suitably
inspected and assessed for repair cost in order that actual costs are reasonable and
authorised?
2.35 How can management confirm that all accident repair costs are justified,
authorised and reclaimed from insurers whenever possible?
2.36 Are accident claims adequately monitored to ensure prompt and
appropriate settlement?
2.37 How can management be assured that vehicle insurance arrangements are
appropriate, legal, and offer good value for money?
2.38 How are vehicles for disposal identified and is the basis for disposal at the
optimum time for the company and the resale market?
2.39 How can management be assured that the company receives a fair market
price for vehicle disposals?
2.40 Are all vehicles assessed for their likely disposal value and monitored to
ensure that the actual proceeds are reasonable?
2.41 Has management established authorised disposal methods for company
vehicles (i.e. via car auctions, dealers, staff sales, etc.) and how can they be sure
that only authorised disposal outlets are utilised?
2.42 How can management be assured that all vehicle disposal proceeds are
correctly identified and fully accounted for?
2.43 Are management made aware of the value of disposal proceeds against
the written down value of the vehicle in the company books, and would
unfavourable variances be promptly highlighted?
2.44 Are disposal proceeds subject to management authority and monitoring,
and how is this evidenced?
2.45 How can management be assured that all vehicle write-offs are justified
and suitably authorised, and what prevents the unauthorised write-off of a
vehicle?
2.46 How is the accuracy of data input from other systems (i.e. authorised
drivers from the personnel records) confirmed?
2.47 How is accuracy of data output to other systems (i.e. vehicle disposals to
the fixed asset system or servicing costs to the accounts payable system)
confirmed?